San Francisco school officials are enacting sweeping reforms of district accounting practices after a group of administrators allegedly diverted money from after-school programs for their personal use, Superintendent Carlos Garcia said.

Garcia said the district intends to tighten its accounting procedures, hire an internal auditor and competitively bid contracts with organizations that run after-school programs and other services.

As first reported by The Bay Citizen in November, former associate superintendent Trish Bascom and four colleagues in the Student Support Services Department allegedly diverted tens of thousands of dollars of district grant money through community organizations to their personal bank accounts, according to district officials and documents.

The reforms, which Garcia described during a meeting this week with The Bay Citizen, were the superintendent’s first public statements since the scandal broke last fall.

“We were pretty shocked…” Garcia said. “Our systems were good, but they could never ensure that our system could control someone doing something stupid.”

Garcia said the district deserves credit for thwarting the long-running scheme.

“What has been missed is that we went out and uncovered this,” he said. “What I think is incredibly important is that systems are only as good as the people.”

The reforms, which are being implemented with assistance from the state, appear to be intended to prevent any one person from gaining the kind of authority that permitted Bascom and her team to operate unchecked for years. With millions of dollars in state and federal money flowing through the district to schools and community organizations, district officials are enlisting more managers to oversee spending.

“Instead of budget decisions being centralized at the top management position, they’re being distributed to site coordinators,” said Deputy Superintendent Myong Leigh.

In the coming months, the district intends to hire an internal auditor who will be charged with investigating alleged improprieties, waste and other problems involving potential misuse of public funds by district employees or contractors. The auditor will also scrutinize budgets and contracts, according to a district job description.

The auditor will report to the superintendent.

Beginning this spring, the district also intends to competitively bid contracts for after-school services, among other programs overseen by the Student Support Services Department. Competitive bidding allows school districts and other public agencies to make quality and price comparisons and identify the most cost-effective contracts.

Garcia said the district had intended to re-bid the contracts following Bascom’s retirement last summer.

The state is assisting the district in its reform efforts, according to

“We are working to assure that they just follow what amounts to transparent and auditable contracting procedures,” said Nichols. “That way, auditors can find all the records that they need when they audit the district and make sure that all financial transactions are legitimate and auditable by law.”

The state is waiting for the San Francisco District Attorney’s office to complete its investigation of the payment scheme before deciding whether to launch a more in-depth examination of the district’s contracting process, Nichols said.

The District Attorney’s office has declined comment.

Responding to reports that executives from community organizations over the last five years had warned top district officials--including Garcia--about questionable accounting practices, Garcia said he had been unaware of any financial improprieties. Various organizations have said Bascom and her team ended their contracts without explanation, violated state financial rules and that grant funding never arrived.

Garcia said the district received several complaints that Bascom was abrasive and difficult to deal with but no allegations of financial irregularities.

“They never brought up fraud issues,” Garcia said. “There were personality issues. Not a single time. No one came up and said maybe there’s something wrong as far as they’re paying people.”

Garcia said the district had decided not to rehire Bascom before she announced her June retirement after 20 years with the district. Around that time, the district launched an investigation, prompted by a whistleblower complaint, and notified the San Francisco district attorney, according to school administrators.

“Before she announced her retirement, we sat down with her and talked about her future,” Garcia said.

District and teachers’ union officials have said that Bascom managed the Student Support Services Department's nearly $20 million budget with almost complete autonomy and awarded contracts arbitrarily.

Bascom and her colleagues are accused of taking roughly $95,000 in district funds, of which $55,000 has been repaid, district officials say. Still outstanding, according to the district, is $40,000 taken by Bascom’s colleague, Linda Lovelace, an administrative analyst in the district before she was fired in September.

Lovelace’s attorney, William Du Bois, said while Bascom approved the $40,000 payment, his client now intends to repay the district in full.

“That is money that she sincerely believed she deserved,” Du Bois said. “Our defense is: This was the way business was done.”

In earlier interviews, Bascom’s attorney, Stuart Hanlon, said his client has returned $15,000 to the district.

District officials say the scheme may run deeper and involve additional money.

In past years, some community organizations complained to Garcia and other officials that Bascom and her team were difficult to work with, and on some occasions pulled their contracts prematurely.

In the spring of 2009, Bascom’s department abruptly cut off funding to The Jamestown Community Center, which runs after-school programs.

“We were operating under the assumption that we had [the grant] because the school had received its award letter authorizing our organization to provide services there,” said Claudia Jasin, Jamestown’s executive director. “We had to lay off several staff and had to reduce services as a result. We never thought someone was using money for their own purposes, but I found it odd in the middle of the year that someone was saying we didn’t have that money.”

Jamestown and roughly 30 other service providers formed the San Francisco After-School Time Coalition in March to address their concerns about the leadership at Student Support Services. Jasin said communication with the district has improved since Bascom’s retirement.